CU Water Cooler: Go Outside the Box

Brent Dixon, founder of The Cooperative Trust, discusses the power of true credit union collaboration to kick off the symposium.

NASHVILLE, Tenn. — Thinking on a larger scale was the overarching message of Brent Dixon’s session that kicked off the CU Water Cooler Symposium.

The Austin, Texas-based founder of The Cooperative Trust shared quite a few facts but the one that seemed to strike a chord with attendees most was that there are more payday lenders in the U.S than Starbucks and McDonald’s put together.

In addition, it turns out that one of the top reasons why people go to payday lenders is actually in a roundabout way because of the fees.

The upfront, clearly spelled out charges, even if they are predatory and making the choice to do so, seems preferable to dealing with a financial institution where fees will be snuck in, Dixon said.

“There’s an opportunity to disrupt the current credit union system gatekeepers of Experian, Trans Union and Equifax to grant access to credit. FICO is a really bad risk assessment tool, so how do we come up with new models?”

He pointed to Zest Finance as an example of a new approach to underwriting. Using large-scale, big data analyzing variables from financial information to technology usage has resulted in the ability to extend credit to 25% more Americans, Dixon said.

Also sorely in need of a large scale makeover? Collaboration among credit unions in the U.S..

“Desjardins in Canada has helped credit unions claim 40% of market share in Quebec. Compare that to our fragmented collaboration in the U.S., which has 6% of market share. There’s opportunity to do more.”